Posted 3 years ago | by Ben Armstrong
Coinbase Has to Face Negligence Lawsuit
Anyone who was involved in cryptocurrency during the last bull run remembers the day the Bitcoin Cash (BCH) fork first showed up on Coinbase. It was an all out disaster. In fact, Coinbase had to halt trading after only 3 minutes as the trading world went bonkers. Coinbase users everywhere were extremely frustrated because the price of Bitcoin Cash was skyrocketing and they could not move their crypto. The actual price per BCH was actually much lower on other exchanges, but it was still in the thousands of dollars.
The interesting thing is that the BCH price spiked right before Coinbase announced that users could trade on December 20th. This seems to indicate at least the possibility of insider trading. The buzz around the insider trading scandal was very loud in the community and many still believe to this day that it did in fact happen. The judge presiding over the lawsuit decided that even if there was not willful and fraudulent attempts by Coinbase to halt trading, it at least is plausible that Coinbase breached their duty to maintain a functional market.
On August 6th, Coinbase discovered they will face a lawsuit brought by former Coinbase user Jeffrey Berk on the behalf of himself and other traders. After two previous attempts to get the case to court, Berk will be able to pursue damages against Coinbase. He will be able to seek damages resulting from possible negligence because there is evidence that Coinbase breached its duty to protect its users.
The judge did dismiss the insider trading fraud claims though because there was not enough evidence to pursue the lawsuit.
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